The Petroleum Industry Bill (PIB) 2020 currently at the floor of the
National Assembly is proposing that a trust fund, called the ‘Host
Community Development Trust Fund’, be set up, where the oil and gas
companies also referred to as ‘Settlors’ operating in the area, would
contribute annually, an amount equal to 2.5 per cent of their total
Operating Expenditure (OpEx) in the preceding year as development trust
for host communities affected by the companies’ exploration and
Meanwhile, the oil and gas producing Host Communities of Nigeria
(Hostcom) is demanding that a fair figure of 10 percent be allowed in
order to compensate for the negative fallouts of exploration and
production activities in their locales.
And the governors of the South-South states in support of their people
have also described the 2.5 percent proposal as inadequate and have
asked for an upward review of the provision for the Host Community Trust
Fund in the PIB to 10 percent in the best interest of oil-producing
communities and the country.
On its part, the Federal Government at the public hearing on the Bill by
the Senate Joint Committee on Petroleum (Upstream, Downstream and Gas),
insisted that the 2.5 percent of oil companies Operating Cost (OpEx)
allocated to the oil producing communities trust fund was a fair deal.
According to the Minister of State for Petroleum Resources, Timipre
Sylva, the proposed 2.5 percent provision in the PIB is reasonable.
Now to me, there is no disagreement among the stakeholders especially on
the position of the oil producing host communities and the Minister of
State for Petroleum Resources on this issue. What has emerged rather
from all the arguments is that there seems to be a deliberate and
mischievous intention to confused and muddle up issues as it affects the
funding of the Trust and this will end up in detriment to the fortunes
of the oil producing host communities.
The question to ask is whether the new PIB at the floor of the National
Assembly is making a very fair proposal – fair to the host communities,
fair to the country and fair to the oil companies?
What needs to be unambiguously addressed is what really the host
communities’ stakeholders including the South South State government are
asking for. Is it percentage as equity holding on declared annual profit
of operating companies or percentage of the companies’ total annual
The South South governors and their people must be clear on whether what
they are calling for is 10 percent equity of declared annual profit of
the operating oil companies or 10 percent of their total annual
Operational Expenditure (OpEx) as the two concepts mean completely two
different things in terms of figures that would accrue to the Trust
Recall that 10 per cent equity holding in the operating companies was
approved in the executive bill that was signed by late President Umaru
Yar’Adua in 2009.
However, in the subsequent versions, it was reduced to 5 percent still
of equity holdings. This time around in the 2020 version of the same
Bill, it has further been marked down to 2.5 percent and clearly stated
that it should apply to the total operational expenditures rather than
the previously stipulated percentage in equity holdings.
These issues needs to be clearly explained and understood if not, the
operating oil companies will hide under the confusion to subvert
whatever was supposed to come into the Trust Fund for the communities’
Before now, you had a provision of 10 percent of profit and profit means
that if the operating oil companies don’t declare it, you don’t have
anything going to the host community funds and you can trust the oil
companies to work with dubious people in government and the NNPC to
manoeuvre this either by under-declaring profit or outrightly coming out
to say no profit was recorded in the year under review. And for sure,
these companies would always cook up more than enough reasons to explain
themselves away as it customary with their dubious dealings with the
people of the oil producing areas.
Another issue to be taken up seriously is the fate of the existing
federal government development intervention agency, the Niger Delta
Development Commission (NDDC). Is the agency still going to exist and
funded by the federal government as currently obtains? Let it not be
that when the oil host communities’ trust fund comes into existence, the
government and the operating oil companies will expect the NDDC to be
funded from the proposed host communities Trust. Everything must be
streamlined and agreed now before the National Assembly goes on to pass
the PIB into law because then it will be too late to dialogue on
anything as concerns the legislation.
To me the more serious issue that our people in the oil communities,
civil society groups and governments of the South South states should
seriously contend is that the 2020 version of the Petroleum Industry
Bill is seeking to give enormous powers to oil and gas companies
operating in the country in the setting up of the proposed host
communities development Trust.
It is curious that the members of Oil Producers Trade Section (OPTS)
which represents the interest of 30 upstream companies in Nigeria
including Chevron, Agip (Eni), ExxonMobil, Shell and Total should be
given absolute power to set up the criteria to appoint the entire
membership of the management/supervisory team of the Trust Fund and even
allowed to solely chose whoever will work there in whatever capacity.
How can the operating oil firms that are parties in the dispute that the
new Bill sets out to resolve be the ones to unilaterally decide who from
the community side of the stake is qualified to serve and/or work in the
Trust Foundation as persons of integrity? It doesn’t make sense at all.
The right thing should be to involve the state governments,
representatives from Hostcom and even some civil society groups in the
selection and composition of the board and staff of the Trust Fund.
As further stated in the Bill, the oil companies shall determine the
selection process, procedure for meeting, financial regulations and
administrative procedures of the Board of Trustees; the remuneration,
discipline, qualification, disqualification, suspension and removal of
members of the Board; and other matters other than those relating to the
operation and activities of the Board.
“The settlor shall, in the determination of membership of the Board of
Trustees, include persons of high integrity and professional standing,
who may not necessarily come from any of the host communities,” the bill
Does it make sense that a party in the dispute should be given such
enormous powers to determine “persons of integrity” that will manage the
welfare of the other person in the same dispute? This is awkward walahi!
Another key source of contention in the 2020 version of the PIB, at
least from the point of view of host communities, should be the fact
that it places the responsibility for the protection of pipeline and
other oil infrastructures with the communities.
Placing the protection of oil installations on some unarmed host
communities people is unrealistic as “previous researches conducted by
Social Action reveals that oil theft which is the major reason for
puncturing oil pipelines is carried out mainly by armed cartels who are
most times not even members of the community.
To the South South people, they must shout now because this 2020 PIB
seem to be deliberately designed to promote more confusion and renewed
spate of crisis in the oil producing areas and further expose the people
to more misery and untold hardship. If they don’t aggressively protest
now, then silence may be taken to mean acceptance.God bless Nigeria!
(Ifeanyi Izeze is a National Daily Guest Columnist: